Page 19 - Chapter 6_Value of Supply

Discussion & Conclusion:-
1) Ü Gross amount of currency exchanged = ₹ 74 × 1,000 = ₹ 74,000.
Ü Since the gross amount of currency exchanged is less than ₹ 1,00,000, value of supply is 1% of the gross
amount of currency exchanged i.e. 1% of ₹ 74,000 or ₹ 250, whichever is higher, i.e. = ₹ 740

2) Ü Gross amount of currency exchanged = ₹ 74.50 × 2,000 = ₹ 1,49,000.
Ü Since the gross amount of currency exchanged exceeds ₹ 1,00,000 but is less than ₹ 10,00,000, value of
supply is ₹ 1,000 + 0.50% of (₹ 1,49,000 - ₹1,00,000), i.e. = ₹ 1,245

10: Rule 32(3): Value of the supply of services in relation to booking of tickets for travel by air
Q.20
M/s Global Travels is providing money changer and air travel agent services to various clients. From
the information provided below, you are required to calculate the value of taxable supply for the month of
March 20XX:
1) It had converted US $ 6,000 into Singapore dollar 9,000. RBI reference rate at that time was ₹ 72 per US $
and for Singapore dollar, it was ₹ 52.
2) It had booked domestic ticket value of ₹ 7,00,000 and international ticket value of ₹ 15,00,000
Additional information:
The concern has not opted to value the money change under rule 32(2)(b) of the CGST Rules, 2017. Basic air
fare component under both domestic and international ticket value is 70% and 60% respectively.
[CA Final Nov 2020 Exam]
Answer:- Legal Provision:
Ü Foreign Exchange Transaction (Rule 32(2)(a), CGST Rule, 2017):- If two foreign currencies are exchanged
(without INR) , the taxable value is 1% of the lower amount after conversion to INR using the RBI reference rate.
Ü Air Travel Agents (Rule 32(3), CGST Rules, 2017) :-
Domestic Bookings - 5% of the basic fare
International bookings - 10% of the basic fare
Discussion & Conclusion:
Ü In the given case, value of taxable service would be 1% of the lower of the following:-
a) USD to INR = $ 6,000 × ₹ 72 = ₹ 4,32,000
b) SGD to INR = $ 9,000 × ₹ 52 = ₹ 4,68,000
Lower Value = ₹ 4,32,000
Ü Taxable Value = 1% of ₹ 4,32,000 = ₹ 4,320
Ü Air Travel Agent’s Taxable supply:
Particulars Amount ( )₹ Taxable Value

Domestic bookings (₹ 7,00,000 x 70% ) 4,90,000 5% on ₹ 4,90,000 = 24,500₹
International bookings [₹ 15,00,000 x 60%] 9,00,000 10% on ₹ 9,00,000 = 90,000₹
Total Taxable Value ₹ 1,14,500
Ü Final Value of Taxable supply:
₹ 4,320 (Foreign Exchange) + ₹ 1,14,500 (Air Travel Booking) = ₹ 1,18,820
This is the total taxable value for GST purposes

11: Rule 32(4): Value of supply of services in relation to life insurance business

Q.21
Chirayu Life Insurance Company Limited (CLICL) has collected premium from policy subscribers.
It does not intimate the amount allocated for investment to subscribers of the policy at the time of supply of
insurance services. The company has provided the following details in relation to its receipts:
S.No. Particulars Amount (₹)
1. Premium for only risk cover 25,00,000

2. Premium from new policy subscribers 40,00,000

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